Apartment rents in the Central area have continued to rise well beyond expectations with many apartment complexes achieving rents up to 20% above previous all-time records!! 

So, what does this look like for the average rental?? 

While all rents have substantially gone up, the most common rental being the very small 40m2 (approx.), 2 bedroom apartment shows the movement well.  

Click here to view a typical ~40m2 - https://apartmentspecialists.co.nz/430-queen-street-apartments-for-sale-auckland-48001/

Pre-COVID in 2019 the average rent these units achieved was approximately $470 per week. Covid took these rents down to around $380pw which they were still achieving last year. But this started to change in December 2022 and in the last few weeks, I saw one go for $610, another $590, and most $500 plus!! We haven't seen rent increases like this since 2014/15 and apartment sales values soared back then.

I predicted the rental recovery to happen this year... but not this quickly. So what happened?

While office workers and students returning have contributed to this, the main reason for the increase in demand has been the explosive number of people entering our country over the last 6 months. Monthly immigration levels are now above pre-COVID 20-year averages and closing in on all-time monthly highs. From 70,000 to 130,000 per month is a big change and fast.  

New immigrants make up a disproportionate part of the Auckland Central community and so Immigration numbers are very important to Auckland central apartments. So while a surprise to everyone and has sent the rental market into a spin, it is just what the CBD needed. Especially the apartment market and hospitality businesses needing staff. 

So rental demand is back. Is immigration the reason rents have gone higher than ever?

No. All the numbers, including immigration, that indicate a healthy or unhealthy Central area are returning but are still a little lower than in 2017, 2018, and 2019. The reason for rents going higher than back then is the silent reduction of available rental stock that has been occurring over the last three years. Social housing, Rentals selling to owner-occupiers, leaky buildings, and Airbnb to name a few contributors. I explained this in-depth in my last report. If you missed it, email me and I will happily send it to you. It will surprise you and it shows a good long-term outlook for apartment values.  

So rent levels are back?

Yes, demand is back, and due to the reduction of available rental property, rents will settle after this current peak season at or above previous levels. Great news. 

And Values? The Auckland Central exodus was the main reason values didn't explode like the rest of NZ so surely values have to follow through, right?

Activity has picked up. Right now, we are busier than we have been for 2 years but value? I am looking and I mean really looking but I can't see any signs of increases. The owner-occupiers are still buying but they aren't who push up values. It’s the everyday investor and despite the fundamentals returning they appear to be caught up in the overall market negativity and simply not buying. It's literally the best time to buy right now argh.. this is so frustrating.  

So who has increased buying to create the activity? 

Experienced investors and professional property experts. They have been sitting on the fence watching and waiting for proof that this market will recover. They have bought and sold through cycles and know what's in store when underlining fundamental change occurs - values will go up substantially at some point. Well, Proof has arrived and they are now buying. My director bought last week our office manager the week before for example. The issue is experts are always few and there simply aren't enough of them to move a whole market. 

So, when then? How long? What are we waiting for? 

The good news is the increased activity is enough, I believe, to stop the further decrease in values and why I am making the call WE ARE NOW AT THE BOTTOM. How long will we remain here and what needs to happen to move it? That's for next month. But only up from here. 

And as always...